Workers Displaced from 2007-2011 have Struggled to Find Employment

Every two years the Bureau of Labor Statistics (BLS) surveys workers who were displaced from “long-tenured” jobs in the previous three years. A “long-tenured” job is one which lasted at least three years prior to the job “displacement.” A job “displacement” is a separation that occurred because: “a plant or company closed or moved, there was insufficient work” or the “position or shift was abolished.” Generally these longer term jobs are better jobs and “displacements” are job separations for economic reasons that occur disproportionately in recessions. The BLS survey is conducted in January or February of even-numbered years. The most recent data from the January 2012 survey indicates that the number of displaced workers was much higher during the 2007-2009 recession and the rate at which workers found new jobs during the recovery has been much lower than after the recession of 2001. However the earnings received by displaced workers who were re-employed at the time of the BLS survey are similar for the recessions of 2001 and 2007-2009.

The following bar chart indicates the number of workers displaced from “long-tenured” jobs per year, over the previous three years, in BLS surveys from 1994 to 2012. The line graph above the bar chart indicates the re-employment rates for these workers as of the survey. On average the survey occurs about 18 months after the typical worker lost their job. The 2010 and 2012 surveys include workers displaced in the 2007-2009 recession while the 2002 and 2004 survey includes workers displaced in the 2001 recession.

A comparison across surveys reveals that:

About 40% more workers per year were displaced from “long-tenured” jobs between 2007 and 2011 compared to the 1999-2003 period.

Workers displaced from “long-tenured” jobs from 2007 to 2011 were 18% less likely to find re-employment within the next 18 months compared to workers displaced from 1999 to 2003.

The next bar chart compares the earnings of displaced workers who were able to find a full-time job after displacement to their previous earnings, based on BLS surveys from January 1996 to January 2012. The red bar measures the fraction of re-employed full-time workers who are paid at least 20% less than previous earnings. The green bar measures the fraction of full-time re-employed workers who are paid least as much as they earned previously.

A comparison across surveys reveals that:

Workers displaced from “long-tenured” jobs between 2007 and 2011, who found another full-time job, were slightly more likely (8.5%) to experience a pay decrease of 20% or more compared to workers displaced from 1999 to 2003.

Workers displaced from “long-tenured” jobs from 2007 to 2011, who found another full-time job, were no more likely to receive a pay decrease of any kind compared to workers displaced from 1999 to 2003.

The recession of 2007-2009 was the deepest downturn since World War II. The recovery since 2009 has been tepid. This is reflected in both the number of workers displaced from jobs they held for at least three years and the low rate at which these workers found jobs during the recovery. There are much smaller differences in the relative earnings of workers who found full-time work in this recovery compared to displaced workers after the 2001 recession. The most troubling empirical finding is that between 2007 and 2011 only about half of workers displaced from jobs they held for at least three years were employed within the next 18 months.